Reporting Advertising Agency Expenses...

[TaxTime829]

Have Ad Agency client... They bill clients standard rates for ads but pay a discounted rate to the TV/Radio etc.

The clients send Ad Agency a 1099-Misc for full amount paid at year end.

Should I deduct the discounted rate as "Other Expense" on the Sch C?... or is there some way to use COGS for this?

[DaveinTexas]

I like COGS

Have Ad Agency client... They bill clients standard rates for ads but pay a discounted rate to the TV/Radio etc.

The clients send Ad Agency a 1099-Misc for full amount paid at year end.

Should I deduct the discounted rate as "Other Expense" on the Sch C?... or is there some way to use COGS for this?

For that expense. I would attach a statement detailing the deduction. That other expense column (Part V) is risky for large expenses as the IRS, and more importantly, auditors do not receive an explanation for those expenses listed in that section. Their copy of the return lists "other expenses" and a giant unexplained number. I have had at least two audits where the auditor has no record of my detailed summary of other expenses and I just heard the same story from a speaker at the NTPI conference last week.

Sorry to ramble, just trying to help others who aren't aware.